What’s an IP PIN and How Can It Protect You?

Author : Camputaro & Associates
Mar 09, 2020

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Identity theft and instances of tax fraud tend to skyrocket during tax season every year. Given how much sensitive identifying information you use to file your tax return, it’s little wonder that this is the case. And, every year, the IRS tries to find new ways to prevent the most common types of scams. This year, they’ve expanded one of their most effective programs for preventing tax fraud: the Identity Protection Personal Identification Number, or IP PIN. Here’s what you need to know about IP PINs, how they work, how to get one, and how they can protect you from becoming a victim of tax fraud.

Fighting a Common Scam

The most common scam run during tax season involves stealing your personal information and filing a false tax return in your name. The scammers then claim a quick payday in the form of your return, and you’re none the wiser—that is, until you try to file your own tax return. This happens to numerous taxpayers every year, and it can be a huge hassle to sort the problem out.

The IP PIN program was implemented to prevent these false returns from being filed. Here’s how it works.

What Is an IP PIN?

An IP PIN is an identification number assigned by the IRS and used to verify your identity when you file your tax return. IP PINs have actually been around for quite some time, but in a much more limited role. When they were first implemented, they were only given to those who were already victims of tax fraud; the taxpayers would use their IP PINs on their filed return to signal which return was valid and which was fraudulent.

In 2010, the IRS began to use IP PINs less as a reactive step and more as a preventative measure. They assigned IP PINs to select taxpayers who hadn’t yet fallen victim to tax fraud, allowing them to use these numbers to prevent a false tax return from ever being filed in the first place. In the beginning, IP PINs were only available in Georgia, the D.C. area, and Florida; these areas were targeted first as they have the highest rates of tax fraud.

Last tax season, the IP PIN program was expanded to include taxpayers in California, Delaware, Illinois, Maryland, Michigan, Nevada, and Rhode Island —again, states with higher-than-average rates of tax fraud. This year, the program is once again being expanded, and taxpayers who are residents of Arizona, Colorado, Connecticut, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Texas, and Washington can now receive an IP PIN for tax purposes.

How Does It Work?

So, how does an IP PIN actually work to protect you from falling victim to tax fraud? If you register to receive an IP PIN, you’ll get a six-digit number from the IRS to be used when you file your return. Simply put the number on your tax return when you file to verify your identity. If you’re opted into the IP PIN program, and a tax return is electronically filed in your name without the correct IP PIN, it will be automatically rejected. If a physical tax return is filed without your IP PIN, it will receive extra scrutiny. This makes it much less likely that a scammer will be able to file in your name and receive your tax refund.

Additionally, an IP PIN is only good for one year; you will receive a new IP PIN every tax season. (However, you only need to opt in once to continue receiving the IP PINs every year.) This makes your IP PIN much more difficult for scammers to steal to use on a fraudulent return.

How Can You Get an IP PIN?

Getting an IP PIN is an opt-in program, so you won’t be assigned one automatically. If you wish for the additional security of an IP PIN, you must have either:

  1. Received a CP01A Notice from the agency with your IP PIN,
  2. Filed last year’s return as a resident of a participating jurisdiction, or
  3. Received a letter from the IRS inviting you to opt in.

So long as at least one of these is true, you can apply for an IP PIN here.

Who Needs an IP PIN?

While everyone can benefit from the added security that an IP PIN provides, it is particularly useful for anyone who’s had personal information stolen in recent data breaches, or for those who typically file late in the tax season.

If you’re interested in receiving an IP PIN, use the link provided to opt in, or contact one of our tax professionals to learn more.

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Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174
(386) 255-2511